TALLAHASSEE — Wading into complicated tax and sovereignty issues, a federal appeals court Wednesday issued a split decision in a dispute between the state and the Seminole Tribe of Florida about rental and utility taxes on tribal property.
A three-judge panel of the 11th U.S. Circuit Court of Appeals said Florida is barred from imposing a real-estate rental tax on non-Seminole businesses that operate at tribal casinos in Tampa and Hollywood.
In the same 64-page ruling, however, the court rejected a tribal challenge to utility taxes collected on electricity used on Seminole property. That part of the ruling overturned a U.S. district judge, who ruled last year that the tribe should be shielded from the rental and utility taxes.
The rental-tax issue stems from leases that the tribe signed with two companies, Ark Hollywood LLC and Ark Tampa LLC, to provide food-court services at the Tampa and Hollywood casinos. Florida typically collects a 6 percent tax on commercial rent payments, but the Seminoles contended that the tax is prohibited at the casinos because of federal laws related, at least in part, to the sovereignty of tribal lands.
Wednesday's ruling said the Florida Department of Revenue sought to justify the rental tax by pointing to services and infrastructure that the state provides. But the court found that none of the services were tied to the business of renting commercial property at the Seminole facilities.
"Florida has not shown that the rental tax is designed to compensate for any state services or regulations related to the act of renting of commercial property on Indian land; rather, the interests the state advances are more akin to raising revenue for providing statewide services generally,'' said the ruling, written by appeals-court Judge Robin Rosenbaum and joined by judges Beverly Martin and L. Scott Coogler.
The court, however, sided with the state on the issue of what is known as a "gross receipts tax" on utility services. The tax is imposed on utility companies, but the tribe argued that the tax dollars would come from the Seminoles for electricity used on tribal lands. As a result, the tribe argued it should not have to pay the state tax.
But the court agreed with the Department of Revenue that the tax is imposed on utility companies and not directly on customers.
"Although an itemized amount of the utility tax becomes a component of the consumer's bill that is, in a sense, transmitted by the utility to the state once collected, it is key in our view that nothing about this section (of state law) requires a utility provider ever to itemize the tax,'' the ruling said. "Ultimately, then, there is no requirement from the Legislature to pass the tax through to the consumer, and it is the requirement that matters."